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U.S. Imposes Highest Acid Rain Fine Ever

WASHINGTON—In a landmark settlement filed today, East Kentucky Power Cooperative, a coal-fired electric utility, has agreed to pay an $11.4 million penalty to resolve violations of the Clean Air Act’s acid rain program, the Department of Justice and the U.S. Environmental Protection Agency announced today.

As part of today’s settlement, the U.S. is seeking court-approval for the highest fine ever under the Clean Air Act's acid rain program. The Commonwealth of Kentucky joined in today’s consent decree.

The settlement requires that the company take steps to reduce approximately 400 tons of harmful emissions each year and offset another approximately 20,000 tons of emissions released from its Clark County, Ky. facility without a permit.

“East Kentucky Power Cooperative has agreed to install pollution control equipment as well as monitor and reduce emissions harmful to our health and the environment,” said Acting Assistant Attorney General Ronald J. Tenpas for the Justice Department’s Environment and Natural Resources Division. “This is an important agreement that has true benefits to the people of Kentucky.”

“We enforce the Clean Air Act to protect people's health,” said Granta Nakayama, Assistant Administrator for EPA's Office of Enforcement and Compliance Assurance. “This settlement shows that when you violate the law, EPA will be there to make you pay.”

The government estimated that the utility’s Dale Generating Station emitted over 15,000 tons of sulfur dioxide and 4,000 tons of nitrogen oxide without a permit from approximately 2000-2005. In addition, the government alleged the utility exceeded the federal annual emission rate for nitrogen oxides.

The utility is also required to apply for an acid rain permit, continuously monitor sulfur dioxide and nitrogen oxides, and install and operate nitrogen oxide controls. These pollution controls will reduce annual nitrogen oxide emissions by approximately 400 tons per year.

Coal-fired power plants are allowed to emit sulfur dioxide and nitrogen oxides in the form of “allowances,” which are granted under federal or state acid rain permits based on a national annual emissions cap. If a utility emits less, it can sell unused allowances to other utilities, or save them for use later. If it emits more, it must purchase allowances from other utilities and surrender those allowances to EPA. In this case, East Kentucky is required to purchase and retire allowances representing 20,000 tons of emissions, which represents their emissions during the period of noncompliance.

Coal-fired plants release sulfur dioxides and nitrogen oxides, which are a primary cause of acid rain that harms trees and lakes, and impairs visibility. Nitrogen oxides and sulfur dioxides cause severe respiratory problems, contribute to childhood asthma, and contribute to smog and haze. Emissions from power plants can drift significant distances downwind and degrade air quality in nearby areas.

Today’s agreement allows the company to pay the $11.4 million penalty over six years. East Kentucky will also pay additional penalties if it meets certain thresholds of financial performance.

Last July, East Kentucky agreed to install pollution controls estimated to cost $650 million and to pay a $750,000 penalty to resolve violations of the new source review provisions of the Clean Air Act at the Dale facility and two other plants.

Today’s proposed agreement, lodged in the U.S. District Court for the Eastern District of Kentucky in Lexington, is subject to a 30-day public comment period and final court approval. A copy of the consent decree is available on the Department of Justice Web site at: